TIDMWMH
RNS Number : 4151G
William Hill PLC
06 November 2018
WILLIAM HILL PLC
6 November 2018
Capital Markets Day November 2018
William Hill PLC (LSE: WMH) (William Hill or the Group) is
holding a Capital Markets Day today at which it will present
further detail on the strategy it outlined at its 2018 half-year
results presentation on 3 August 2018. Presentations will be given
on each of the three key strategic areas.
Our ambition is to build a digitally led and internationally
diverse gambling business, and to at least double profits between
2018 and 2023. Our strategy is focused around three priorities:
-- Driving digital growth in the UK and internationally;
-- Growing a business of scale in the US; and
-- Remodelling UK Retail.
This is underpinned by the Group's approach to sustainability
and our long-term ambition that nobody is harmed by gambling.
Philip Bowcock, CEO, commented:
"We are outlining today ambitious growth targets that take
account of both the near-term challenges and longer-term
opportunities ahead for each of our three divisions. We will
meaningfully reshape William Hill over the coming years, moving
from a business that is predominantly UK-centric and land-based to
being a leading gambling business that is digitally led,
internationally diverse and sustainable. With more markets opening
up to online gambling around the world - including the US - we can
build on the heritage of the respected William Hill brand to take a
leading position on the gambling world stage."
Driving digital growth in the UK and internationally
Our ambition for Online is to build the world's most trusted
digital gambling brand and a business with greater scale, more
geographic diversity and higher profit margins. The UK is our
largest market and we will deliver an engaging and safe customer
experience which will enable us to grow sustainably ahead of market
growth rates and gain market share. We will also look to accelerate
Online's revenues by diversifying into faster growing international
markets beyond the UK and the US, and have recently announced a
recommended cash offer to acquire Mr Green & Co AB (MRG) as
part of this. Overall, our target is to grow digital revenues to
reach cGBP1bn (in constant currency) by 2023, representing a CAGR
of c10%, and by increasing operational efficiency to double profits
by 2023, representing a CAGR of c13%.
Despite our confidence in the longer term opportunity, 2019 will
be a transition year as good underlying growth will be offset by
the increased Remote Gaming Duty and the full-year effect of
regulatory headwinds. As a consequence Online profit is expected to
be broadly flat on 2018 (excluding any contribution from MRG)
before we expect to see a return to double-digit growth
thereafter.
The acquisition of MRG is expected to contribute approximately
GBP25m EBITDA plus synergies in 2019. Synergies of more than GBP6m
p.a. are expected by 2021.
Growing a business of scale in the US
Market estimates suggest that the US could generate between $5bn
and $19bn of sports betting revenues by 2023, depending on the
speed and nature of state-by-state regulation. This is a major new
market opportunity and one that the Board of William Hill believes
it is very well placed to pursue as we are the US's leading sports
betting company. William Hill US already benefits from being
supported by a successful and profitable Nevada operation. With
these foundations already in place, our goal is to be the market
leader and we intend to enter every state that regulates sports
betting with mobile and/or land-based operations depending upon
each state's regulations. Our strategy is focused on market access,
brand and operational excellence. Where regulations and
partnerships allow, we will lead with the William Hill brand, and
will use 'powered by William Hill' as a secondary brand
approach.
Our ambition is to grow William Hill US's EBITDA from c$50m from
the US Existing business in 2018 to c$300m from the US Existing and
US Expansion business in 2023. We expect our operations in new
retail and tethered mobile states to become profitable within their
first one to two years, supporting investment in brand, marketing
and technology. Open mobile markets, which require greater
investment in building our brand profile, will achieve
profitability over a longer timeframe. We are investing c$70m in a
new proprietary William Hill US technology platform using proven
components from inside the Group and from NeoGames. This modern,
modular platform is designed to meet the flexibility needed for
this market and to give us the best technology in the market during
H1 2019. Based on the states we have entered and are entering in
2018, William Hill US in 2019 is expected to make a loss of
c$0-20m. We will update on the impact of further states as and when
they open.
Remodelling Retail
Our Retail business is focused on addressing the challenges laid
down by the Triennial Review decision, which will drive substantial
structural change across the licensed betting office sector over
the coming years. This will include product innovation to offer
alternatives to B2 gaming, as well as remodelling the estate and
the business. The implementation date has been announced as October
2019. As previously announced, we expect this change to reduce
Retail's profitability by GBP70-100m following mitigation measures,
including cGBP15m of cost reductions. Based on the October
implementation date, Retail's Q4 2019 profits are likely to reduce
by cGBP40m as mitigating actions will primarily be seen from 2020
onwards. Exceptional costs of remodelling Retail are expected to be
cGBP40-60m.
Balance sheet, capital expenditure and dividend
The Group's investment behind its strategy is supported by a
strong and flexible balance sheet. Following completion of the
proposed MRG acquisition in January 2019, net debt to EBITDA is
expected to be around 1.3 times. Capital expenditure in 2019 is
expected to increase to cGBP120-130m as we invest in US
expansion.
The Board of William Hill recognises the importance of the
dividend alongside the opportunities to invest in long-term growth
and driving substantial shareholder value. As previously stated,
the Group's dividend policy is to pay out c50% of underlying
earnings and as communicated at the 2018 half-year results the
Board is committed that, for 2018, this will be calculated
excluding US Expansion.
As the Group moves forward, and with our US ambitions now
clearer, the Board believes it appropriate that dividends are paid
out of true underlying earnings and as such US Expansion will be
included in the calculation of underlying earnings from fiscal 2019
onwards.
However, reflective of the Board's confidence in the Group's
strategy, strong capital position and future cash generation, the
Board is today committing to underpin the overall annual dividend
at not less than 8 pence per share from 2019 onwards, regardless of
underlying earnings until the Group's earnings growth brings it
back into line with the policy.
OAM: Inside Information
William Hill LEI: 213800 MDW41W5UZQ1X82
Enquiries
William Philip Bowcock, CEO
Hill
Ruth Prior, CFO
Lyndsay Wright, Director of Strategy Tel: +44 (0) 20 7612
and Sustainability 3000
Tom Randell, Head of IR
Ciaran O'Brien, Group Communications
Director
Brunswick Andrew Porter / Chris Buscombe Tel: +44 (0) 20 7404
5959
Capital Markets Day
The capital markets day presentations will start at 1.00 pm GMT.
A video webcast of the event will be available at
www.williamhillplc.com. The presentations will be made available on
the website at 1.00 pm GMT.
About William Hill PLC
William Hill PLC is one of the world's leading betting and
gaming companies, employing around 16,000 people. Founded in 1934
and listed on the London Stock Exchange, it aims to provide
gamblers with a fun and safe gambling experience, and has set the
ambition that nobody is harmed by gambling. The majority of its
GBP1.7bn annual revenues are still derived from the UK, where it
has a national presence of licensed betting offices and one of the
leading online betting and gaming services. William Hill Online has
operations in Italy and Spain and serves online customers
throughout the world from its headquarters in Gibraltar. In 2012,
it established William Hill US with a focus on retail and mobile
operations in Nevada, which is now the largest sports betting
business in the US. It currently operates 126 race and sports books
in Nevada, New Jersey, Mississippi, West Virginia and Iowa, is the
exclusive risk manager for the sports lotteries in Delaware and is
the exclusive partner to IGT to provide sports betting services to
the lottery in Rhode Island. It also has licensed operations in The
Bahamas and St. Kitts. William Hill PLC is listed on the London
Stock Exchange and is a member of both the FTSE 250 and FTSE4Good
Indices.
Cautionary note regarding forward-looking statements
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "plans", "goal", "target",
"aim", "may", "will", "would", "could" or "should" or, in each
case, their negative or other variations or comparable terminology.
These forward-looking statements include all matters that are not
historical facts. They may appear in a number of places throughout
this announcement and the information incorporated by reference
into this announcement and include statements regarding the
intentions, beliefs or current expectations of the directors,
William Hill or the Group concerning, amongst other things, the
results of operations, financial condition, liquidity, prospects,
growth, strategies and dividend policy of William Hill and the
industry in which it operates. By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the
future and may be beyond William Hill's ability to control or
predict. Forward-looking statements are not guarantees of future
performance. The Group's actual results of operations, financial
condition, liquidity, dividend policy and the development of the
industry in which it operates may differ materially from the
impression created by the forward-looking statements contained in
this announcement and/or the information incorporated by reference
into this announcement. In addition, even if the results of
operations, financial condition, liquidity and dividend policy of
the Group and the development of the industry in which it operates,
are consistent with the forward-looking statements contained in
this announcement and/or the information incorporated by reference
into this announcement, those results or developments may not be
indicative of results or developments in subsequent periods. Other
than in accordance with its legal or regulatory obligations
(including under the Market Abuse Regulation (596/2014), the
Listing Rules, the Disclosure Guidance and Transparency Rules and
the Prospectus Rules), William Hill does not undertake any
obligation to update or revise publicly any forward-looking
statement, whether as a result of new information, future events or
otherwise.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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